Breaking Down the Revenue

     A few weeks ago in class, we took a look at the Deloitte Football Money League report for 2010.  The graph pictured above is a more updated version of the report; however the figures I'll be using will be from the 2010 issue.  This annual report breaks down the finances of the top-20 highest earning clubs in soccer for the previous season.  While I'd like to write a blog post on a La Liga topic without returning to the persistent idea of the league consisting of Barca and Madrid, and then everyone else, this report once again supports this view.  Of the 20 teams dissected in the report, Madrid landed the number one spot.  Barcelona was right behind them at number two.  The next eighteen teams on the list consisted of zero Spanish teams.  So, once again, we can see that Barcelona and Real Madrid really are in a league of their own within La Liga.  We've talked enough about the domination of these two teams, so I'm going to put that issue aside for this post and instead break down the revenue of these teams to see just exactly where they're getting all their money from.
     I'll start with Real Madrid.  In 2009, Madrid became the first sports team ever to bring in over 400 million euros in revenue!  So just where did all this money come from?  The simple answer is broadcasting.  Of their approximately 401 million euros in revenue, 40% of it comes from broadcasting, 35% from commercial sales, and the remaining 25% is from matchday.  Madrid's 160.8 million euros from broadcasting is more than the total revenue of every club outside of the top-ten on the Money League list.  This means that you could take away the 60% of Madrid's revenue coming from matchday and commercial sales and they would still be sitting in the top-ten financially.
     Barcelona's financial breakdown is very similar to Madrid's.  Whereas Madrid has been on top of this list for the past five seasons, Barcelona overtook Manchester United for the second spot from 2008 to 2009.  Of Barcelona's approximately 366 million euros in revenue, 43% comes from broadcasting, 31% from commercial sales, and 26% from matchday.  The breakdown of Barcelona's revenue is therefore very similar to Real Madrid, with Barcelona relying slightly more on it's broadcasting deal and slightly less on commercial sales.  Barcelona's 366 million euros in 2009 was equal to Madrid's total in 2008, so based on that, it would not have been shocking at all to see Barcelona join Real Madrid in the exclusive 400 million euros revenue club after the 2010 season, but as we see in the graph above, they fell just short of this benchmark.
     So if you treat Barcelona and Madrid as one combined entity (for comparative sake) we can see that approximately 42% of their money is from broadcasting, 33% is from commercial sales, and 25% comes from matchday.  Let's compare this to some other clubs in different leagues.  When you look at the elite teams in the EPL such as Man U, Arsenal, Chelsea, and Liverpool, none of these teams break the 100 million euro mark from their television deals, and none of them had more than 40% of their revenue coming from their broadcasting deals.  They generally brought in more money from commercial sales or matchday figures, bringing in as much as 45% of their revenue (in Arsenal's case), from matchday sales.  Their percentage of revenue coming from broadcasting depends much more on how they do in any given year than it does for teams in La Liga.  An example of this is with Liverpool, who's revenue from broadcasting rose 5% after coming in second place in the Premier League the previous year.
     The fact that only two of the top 20 teams on the "rich list" are from Spain seems low, but it's understandable.  The fact that the top two teams on the list are Spanish, and then there's no other Spanish team in sight, however, is alarming.  Barcelona and Madrid bring in so much money from commercial and matchday sources that if La Liga were to restructure its TV deals, these two teams would still have a huge financial advantage.  It would simply be less than the massive disparity gap that exists today.  We've talked so much about Barcelona and Madrid's dominance in La Liga.  This report shows us however that we have been too narrow-minded when looking at the dominance of these two teams from a financial aspect.  Barcelona and Madrid don't just dominate La Liga financially, they're beginning to break away from every soccer team in the world.  While a lot of this has to do with their national and global popularity, they don't necessarily have huge advantages in this regard when compared to a team such as Manchester United, for example.  The advantage comes from La Liga's TV deal set-up.  Is it time something is done?

Sources:  http://www.deloitte.com/view/en_GB/uk/industries/sportsbusinessgroup/6a5fb29b3f907210VgnVCM100000ba42f00aRCRD.htm ; http://i.bnet.com/blogs/deloitte-total-revenues.jpg